Boy, a lot sure happened after I logged off last night. I am still of the opinion that all data matters, but not in isolation. The list v sold price is interesting, and it is a tool to use along with current comp pricing ($ price plus price per sf), and other factors. Ultimately a good agent will help guide the pricing process so you don't overpay in this market, but in searching for a home, these indicators help a buyer get a feel for the market.

You said”, Independent numbers from Data quick, property shark, or Case-shiller or something else provides the only viable sources for me.
Data quick pulls from county records which include non-arm’s length transactions (i.e. inter-spousal transfers, Quit claims, etc. and has its own flaws.
Property shark is a mash-up of county records, etc.
Case Shiller uses OLD data which is good at looking at Macro long term trends, but does little for the people in the trenches looking at real time information (Listen to my podcast on their methodology).
MLS is pulls data on homes trading hands in the open market. Whatever you think about Realtors, their data is controlled so as to be as accurate as possible—and timely.
You said,”Inventory is key, yes. DOM is key, but not a reliable statistic unless you have the time and ability to mine the data yourself, or you really have a trustworthy agent (big IF, sorry but it’s true).
We do. And it’s on our web page for everyone to see. I have no agenda, no horse in this race. The market is what it is but people who do not understand the nuances are being spun right into somebody’s agenda.
Look for yourself, we talk about the median price being distorted (up), and take action to get at the real numbers.

An in the oath of honesty, I cannot assit you in getting to the real numbers in your area--they are out of mine. More buyers should be able to get at what I do for the Peninsula.

Good blogging with you. I can send you raw data for over there if RF doesn't mind. I heard they haven't gone back that far.

Drew, I just posted my reply before reading your 2nd post. We were typing at the same time obviously. Ha.

I checked out your site a little. I like what you have on a localized version of the Case-Shiller. I love the C-S reports on a macro-level also, because it is the best method out there for reporting and tracking. But it does not help me on a local level as you mention. I wish you were doing your data mining and reporting in the areas I am interested in - Oakland/Berkeley and San Francisco.

I commend you for doing this work on a local level. I have yet to see anyone else do it. I wish you or someone would do it for my areas of interest!

Drew, my apologies. I came off a little harsh and should not have put words in your mouth. Not fair.

Substitution is a real thing going on right now I very much agree. I know of many in SF who have already decided their substitute of a nice house in the hammered Oakland market was a better alternative than their condo/loft/small SFR/etc in SF. I, as well as several friends, are also contemplating this exact move. Just one example.

Inventory is key, yes. DOM is key, but not a reliable statistic unless you have the time and ability to mine the data yourself, or you really have a trustworthy agent (big IF, sorry but it's true). I personally do not trust anything from the MLS, especially mass data reports because too much blended crap in with the good. Independent numbers from Dataquick, propertyshark, or Case-shiller or something else provides the only viable sources for me.

Median price really is not worth watching if you are looking for a home. It really has no bearing. Comps do. Recent comps. You could be in a zip code or county or city where the median is much lower or much higher than the houses you are looking at, so what does that tell you? Absolutely Nothing. Neighborhoods and developments within a certain locale (for median purposes) vary greatly so this matters not.

The median price is fodder for the MSM to print and talk about and create stories. It means something to economists, etc but is not valuable to Joe Homebuyer as he searches for his next home.

Cheers!

Sorry for the double post.
As to your comment, “And median is not a good statistic to follow either. Especially now as the mix of homes selling is what is important, which is unfluenced greatly by the credit crunch and foreclosures.”
But what if you could account for the mix?
My answer is we make adjustments to take into consideration these factors in our analysis. We look for distressed sales and periods where large or smaller homes are selling to get to the real median values.
It’s all on our blog page for you to see. And if I may add, no one is doing this analysis to the extent we are. Raw data will not tell you the true median price drop. Our calculations are much more thorough, detailed and enlightening than Standard & Poor's, much to the dismay of the real estate industry.
These are two enlightening articles I did where we discuss:
How to determine the True Median Price
http://beautifulmountainblog.t...
How to adjust for larger or smaller homes selling
http://beautifulmountainblog.t...

Sorry for the double post earlier.

As to your comment, “And median is not a good statistic to follow either. Especially now as the mix of homes selling is what is important, which is unfluenced greatly by the credit crunch and foreclosures.”

But what if you could account for the mix?

My answer is we make adjustments to take into consideration these factors in our analysis. We look for distressed sales and periods where large or smaller homes are selling to get to the real median values.

It’s all on our blog page for you to see. And if I may add, no one is doing this analysis to the extent we are. Raw data will not tell you the true median price drop. Our calculations are much more thorough, detailed and enlightening than Standard & Poor's, much to the dismay of the real estate industry.
These are two enlightening articles I did where we discuss:
How to determine the True Median Price
How to adjust for larger or smaller homes selling

DG—With all due respect, you do not know me, yet you choose to deride my comments.
You said: “Drew, you could not be more wrong. Of course people overprice their homes. That happens in any market, not just a declining one like now. Irrelevant. You probably think the “30% over asking!” marketing claims by many realtors in the escalating market of recent boom years was good info too huh. Please.”
Please what? Don’t try to spin my words; what you are doing is transparent. I DO NOT think 30% over asking is what to offer; in fact what I am saying is that it may be 30% or more under asking—especially when sellers overprice.
What buyers need to do is pay attention to the principle of substitution. For example, if a buyer has seen ten homes they like better for less, that’s a good benchmark. Buyers need to educate themselves as to relative value. They need to see the entire inventory and then weigh the stats as one factor. The seller’s list price and the percent they receive has NOTHING to do with intrinsic value.
If you like to watch statistics, you need to weigh:
• The Month’s inventory (will help you know if your area is in a buyer's or seller’s market).
• The days it takes to sell a home—coupled with the percent the seller receives of asking
• The Median price IS important because even if all of the other indicators are in the sellers favor, if homes are selling for less, but at a high percentage of asking, then they are selling at a high percentage of a lower price.
The percent of list price that sellers are receiving should have no bearing whatsoever on what you offer for a home. The home is worth what the home is worth. It’s up to buyers to know what homes are worth. You are right in that the DOM stat changes which again, is why it is so unimportant. It only tells you that when the seller gets close to real market value, what happened. Did the seller under price their home to get bidding wars?

DG—With all due respect, you do not know me, yet you choose to deride my comments.
You said: “Drew, you could not be more wrong. Of course people overprice their homes. That happens in any market, not just a declining one like now. Irrelevant. You probably think the “30% over asking!” marketing claims by many realtors in the escalating market of recent boom years was good info too huh. Please.”
Please what? Don’t try to spin my words; what you are doing is transparent. I DO NOT think 30% over asking is what to offer; in fact what I am saying is that it may be 30% or more under asking—especially when sellers overprice.
What buyers need to do is pay attention to the principle of substitution. For example, if a buyer has seen ten homes they like better for less, that’s a good benchmark. Buyers need to educate themselves as to relative value. They need to see the entire inventory and then weigh the stats as one factor. The seller’s list price and the percent they receive has NOTHING to do with intrinsic value.
If you like to watch statistics, you need to weigh:
• The Month’s inventory (will help you know if your area is in a buyers or seller’s market).
• The days it takes to sell a home—coupled with the percent the seller receives of asking
• The Median price IS important because even if all of the other indicators are in the seller favor, if homes are selling for less, but at a high percentage of asking, then they are selling at a high percentage of a lower price.
The percent of list price that sellers are receiving should have no bearing whatsoever on what you offer for a home. The home is worth what the home is worth. It’s up to buyers to know what homes are worth. You are right in that the DOM stat changes which again, is why it is so unimportant. It only tells you that when the seller gets close to real market value, what happened. Did the seller under price their home to get bidding wars?

http://www.morganhomes.com

^^^ Jackie, I'm sorry but I really don't think so.

Nothing commonly held about it. You have most sellers thinking their house is worth X and most buyers thinking it is worth 80-90% of X. This is why we have high DOM, multiple reductions, and many houses being pulled off the market and attempted to be rented.

Prices, especially in this market, are largely affected by the individual motivation of a particular house's owners. Looming foreclosure? Hurry to sell before prices really crash? Etc etc. There are plenty of deals out there in certain areas based on the urgent needs of the sellers, and there is still overpricing in areas where the sellers are unrealistic of the market value and have no clue or good guidance from their realtor. These people are not getting their homes sold and pull them of the MLS and try again later (hey, new listing and new lower "original asking price!") or they try to rent it out.

Perhaps there's a commonly held perception of what the correct price for a house should be. And when the right number is offered, that house is snapped up.

The "last listing price" is in no way useful when gathered and tallied for stats such as these. I track properties all over SF and the East Bay and they are removed and repriced all the time in this market.

Why is this sold price as a % of list price data not useful? Because it misleads buyers (uneducated buyers in the real estate world, which most are) to think they need to bid close to 95-100% of the list price. This is absolutely not the case. In fact, in many areas an opening bid should be in the 85% range on average... that's just an average, people. Could be more, could be less.

Drew, you could not be more wrong. Of course people overprice their homes. That happens in any market, not just a declining one like now. Irrelevant. You probably think the "30% over asking!" marketing claims by many realtors in the escalating market of recent boom years was good info too huh. Please.

And median is not a good statistic to follow either. Especially now as the mix of homes selling is what is important, which is unfluenced greatly by the credit crunch and foreclosures.

In summary, the sales price as a % of list will never be a reliable statistic because of the rampant manipulation of the MLS and its realtors. Like someone above said, get your comps, know your market and the seller's equity and motivation situation, and that is your real ammo. Not median price. Not sales price as a % of list in that city, hood, etc.

"But I do think that the list v sold price can be helpful in preparing a bid, and knowing what forces are at work in a particular market or neighborhood"

As these are in fact "last list v sold" ratios, how, given that a buyer has no way of knowing that the "current list" will ultimately be the "last list"? An example: property on sale for $600k in Daly City. Comps say the property is worth around $550k. The "last list v sold" ratio tells us that Daly City houses are selling at 101.2% of "last list". How is this useful information to a buyer wanting to make a bid?

Bahn - thank you for the additional data.

Drew - well said and thank you for the link.

Susan is right. It matters not what the percent of the original asking price is because seller’s often overprice their homes, or as is now the case, the market is dropping.
The percent a seller receives is only one broad indicator of how strong a market is. The median price drop will tell you more than what percent a seller is receiving.
Here’s a link to Redwood City’s market activity going back to 2004 so you can compare the same stat over time:
http://www.morganhomes.com/cha...

Best regards,
Drew

Susan's right, we started pulling this data earlier this year. Here's a data set we pulled for the city of San Francisco last month:

http://sfbay.redfin.com/blog/2...

Good points, all. You really ask the tough questions. While I am not a number cruncher, I will add my two cents on the data and your queries.

Colin – I don't disagree that a fair price is what a buyer wants. But I do think that the list v sold price can be helpful in preparing a bid, and knowing what forces are at work in a particular market or neighborhood. The more knowledge, the better.

SMHSIT – True this, but in reviewing comps, a good realtor can tell you how many reduction a comp had before selling, helping with the decision. And I gotta wonder who is buying all those homes in the Dumbarton neighborhood. Investors?

MikeW – this is based on the listing price at the time of the sale, which I believe is the available data that comes from MLS. I think that the most recent listing price prior to the sale, no matter the number of reductions, is indicative of what the market would bear at the time of the sale, and therefore relevant, more so for buyers than the actual market. As for this period last year, Redfin just began this number crunching earlier in 2008, so we do not have that info. But look us up next year and we'll be able to do those comparisons.

So I am unclear on these statistics. Is this selling price vs. last listing price or selling price vs. original listing price?

Given the % of properties with price reductions, if these statistics are based on last listing price, I don't think you can necessarily take from that any strength in the market.

What were the ratios for the prior period and for this time last year? What was the % of homes with price reductions in the prior period and last year vs. this period.

Without that information, I am not sure what to take from these statistics.

I have always found that the percentage of sold to asking price data to be a bit misleading because the MLS bases the percentage on the LAST asking price. That means if a house had 5 reductions you could still get a 100% of asking because the last asking price is super low. I think that's why Redwood City has 100.2% because a lot of stuff in the Dumbarton area were cut really really low.

Susan, I strongly disagree. What's far more important to a buyer is whether they are paying a "fair" price for a property. This has little to do with listing price, and much to do with recent comparable sales and the direction those sale prices are trending. A savvy buyer should not be making a bid based on a percentage of listing price, but on those comparables, especially in a market like we currently have. Who's to say the current listing price of a property isn't simply a "wishing price" of the seller and will end up having many reductions before sale or being withdrawn from the market?

MD Account - I will pass on your wisdom to the powers that be - and it sounds like very good advice indeed, particularly with your success in raising your credit score.

Colin - for this purpose it serves as a basis for what buyers (and sellers) can expect to bid or receive on houses by location. It is true that price reductions and relistings change the listing price, but what is important is the difference between the listing price at time of bid, and the bid amount accepted.

I guess I don't understand the fixation on "list prices". They're far too easily manipulated (relistings being the obvious example)and in the bigger picture, who cares? What's important is surely what houses actually sell for and how those prices are trending.

I just took a look at the presentation and it's great, with one major exception. You advise people to "close unneeded accounts" to raise their credit score. This is exactly the wrong strategy and will backfire.

Your credit score is based, in part, on how long you have had credit and the % of credit you are using. So, if you have a total credit line of $10K (from all cards put together) but have only used $1K, your credit utilization is 10%.

If you close accounts, you may close older accounts which can reduce the average age of your credit, and thus drop your score. You will definitely reduce the amount of your total line of credit, which will raise your credit utilization (i.e. $1K used on a line of $5K means 20% utilization) and that will lower your credit score.

Don't close accounts. Pay them off and put away the card, but don't close the account!!!

And, btw, I went to work on my credit report when I began looking for houses, and raised my average score 100 points in 4 months. I'm now eligible for the best rates in a terrible market, so it's well worth doing. The MyFico community forum boards provide excellent advice on how to strengthen your score and ensure negative information is removed.